If you ask developers and man on the street, they would tell you that demand is low because of price factor and tighter credit control.

There have been calls by numerous parties, including housing developers, to loosen mortgage lending in Malaysia to encourage home ownership.

In response to such calls, Bank Negara Malaysia has created a “Housing Watch” website. The data there shows it is the lack of affordable housing and not access to credit, which is deterring home ownership.

Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar said recently in Dewan Rakyat that affordable housing projects were far from reaching its target of 1.1 million units by next year.

He said only about 23 per cent of the houses had been completed to date.

A total of 285,097, or 25.6 per cent, of houses are under construction, while 432,415 units, or 39 per cent, are in various planning stages.

The remaining 138,775 units, or 12.4 per cent, have yet to make it to the planning stage, said Noh Omar.

Affordable housing projects include the People’s Housing Project (PPR), the 1Malaysia People’s Housing Scheme (PR1MA), the Youth Transit Home scheme, the MyHome and MyDeposit programme, as well as the revival of abandoned developments.

The projects are implemented through the federal and state governments as well as the private sector.

According to Malaysian Rating Corp Bhd (MARC), access to affordable housing was affected by a combination of factors.

MARC said a solution to the problem would require, among others, a rebalancing of the supply-demand dynamics of the housing market and effective implementation of medium- and long-term development measures to accelerate household income growth.

“Considering the complexity of the housing affordability issue, loosening mortgage lending requirements alone will be insufficient to solve the problem. More importantly, it is not a long-term policy measure and should not be treated as one,” it said in its Economic Report titled “Affordable Housing Woes: Holistic Long-Term Policies Necessary”.

The report indicated that house prices have escalated in recent years, with prices increasing by an average of 9.3 per cent per year from 2010 to 2016, compared with only 3.6 per cent per year over the 2002 to 2008 period.

Since 2012, the pace of growth of house prices has been outstripping that of income levels due in part to the supply of new housing increasingly becoming concentrated in the higher end segments.

“As the median annual household income stands at around RM63,000, many find the bulk of newly-launched houses unaffordable. In addition, the growth pace of Malaysia’s median monthly household income on a compounded annual growth rate basis had moderated in recent years. If this trend continues, the issue of housing affordability can be expected to persist.”